It is no secret that 2022 has been an incredibly volatile year for investors. In fact, both equity and cryptocurrency markets have experienced market tumult not seen since the pandemic-induced crash of 2020—when the Dow Jones Industrial Average, for instance, plummeted from a high of approximately 29,551.42 to a jaw-dropping low of 18,591.93, all within the span of six weeks. For perspective, this index low was a number not seen since 2016.
Despite these questionable circumstances, one critical question remains: where are equity markets headed from here? In this article, we are highlighting a range of expert opinions regarding the best strategies to beat the market, as well as approaches to potentially avoid.
In a CNBC interview earlier this year, Shark Tank superstar Kevin O’Leary noted that when it comes to equities and high-interest-rate environments, investors may want to consider “companies that have pricing power.” He went on to note that “their goods and services are necessities for people, so they are willing to take a small increase in price, sometimes a larger one, as rates go up.” The renowned investor further highlighted energy, healthcare, and consumer cyclicals as sectors that may serve as good opportunities for investment during this period defined by uncertainty and high interest rates
Earlier last month, Bank of America chief investment strategist, Michael Hartnett, highlighted that the recent rally in equities experienced over the past two months is typical of a “bear market rally,” and noted that further pain could be in store, particularly because “everyone is bearish, but no one has sold stocks.” If this is the case, this may be an indication that investors should remain cautious and prioritize maintaining cash positions.
Despite the famed investor, Dallas Mavericks owner, and fellow Shark Tank superstar being a cryptocurrency enthusiast who is well-versed in the blockchain space, he recently advised against one potential investment opportunity. During a recent podcast interview, he commented on investors purchasing metaverse (i.e., virtual world) properties, which he defined as, “the dumbest [expletive] ever.” In an environment in which the real-life housing market is expected to experience a bear market during the coming months, according to a recent report by Goldman Sachs, perhaps it is no surprise that purchasing virtual property may not be the best bet during this continued market tumult.
According to UBS Group AG strategists, led by Matthew Mish,
United States corporate credit spreads are underpricing recession risk.
Specifically, Mish wrote that these spreads imply “a 25% chance of a recession,
compared to UBS’s
forecast of a 55% chance.” He went on to suggest remaining “cautious on credit.”
Ultimately, with market pessimism continually reaching new heights in recent weeks, there is undoubtedly a range of possible approaches to take. Pundits in print and television media continue to offer a range of investment suggestions, and it goes without saying that not all approaches may be right for you—nor will all match your own investment theses. Nevertheless, going forward, the best approach may very well be to closely monitor market conditions and proceed with caution—one step at a time.